Jun

17

I had the great opportunity last week to connect with legendary ‘mine-finder’, Bob Quartermain, President and CEO of Pretium Resources.

It was a fascinating conversation, as Bob spoke on mineral discovery strategy, turning discoveries into wealth during his 36-year career, as well as his observations and thoughts on the gold market.

When asked how he’s been able to repeatedly find some of the world’s largest and highest grade gold and silver deposits throughout his career, Bob said it’s all about, “Applying good, sound geology, having a thesis, and be willing to invest in [that] thesis. But if it’s wrong—then being able to walk away. It’s a philosophy [and discipline] I learned early on working with Teck Corporation…[that] mining is a business, and you have to have the right style of mineralization in order to be able to economically mine.”

A geologist by training, Bob indicated that great mineral deposits are found by first, “Look[ing] at the underlying geology…If you have a large altered system1, lots of fluids [will have] moved through it, and minerals are deposited at the surface from magma chambers2, or perhaps [by] erosion from other areas…[So] you want to look for those large alteration zones…and then within those areas it’s about [form]ing a thesis or an opinion, being focused on that conviction, and continuing to drill and test.”

Fitting right into that geological ‘narrative’ Bob explained, is Pretium Resource’s Brucejack mineralization, in that, “[It] has come up from hydrothermal solutions at depth…and over the course of two years, has generated almost 80 [drill] hits greater than a kilo [per ton of gold]…One of the highest grades we had was about 41 kilograms of gold, plus 27 kilograms of silver, across about a half a meter. So that’s somewhere in the order of 1,200 ounces of gold [per ton] over a couple of feet. I’ve never seen those types of grades in my career(see photo below).”

(click to enlarge)

It was in the careful search and study of these types of exceptional drill hits that allowed Bob to take his former company, Silver Standard Resources, from a $2 million market cap, to nearly $2 billion before retiring from the company in 2010.

In reflecting on that wealth creation, Bob noted that, “What I’ve liked though my career has been discovery, because the way to create shareholder value is by using the drill bit, and discovering something in the ground—and there can be a lot of value driven from that discovery.”

When asked to comment on today’s tough resource market, given his 36 successful years in the business, Bob explained the key to overcoming difficult markets is in, “Having the right assets,” but more importantly, “the perseverance, the conviction, and the ability…to go through these high and low metal cycles.”

In moving on to the subject of physical gold; Bob is known for traveling around the world regularly, updating shareholders of Pretium on operational progress of the company. During his free time on those trips—he visits gold shops.

“I recently came back from a trip to the Middle East,” Bob explained, “When the gold price (on paper), was falling to recent lows of $1350. And when I [went] to the gold souks in the evening either in Doha or in Dubai, it was just full of people in there, trying to buy gold jewelry and bars. So there was this real disconnect, between the physical attraction for gold, and what was going on in the paper markets.”

Further reflecting on the fundamentals of gold, Bob added that,“I’ve been a precious metals bull all my life…[and a] component of my portfolio is in physical gold…it always has a bid, it’s transportable, you can carry it, and you can turn it into cash fairly quickly. You can sell a gold equity and you may need a few days of settlement on that, [but] if you take a gold bar into a bank, you get immediate cash for it.”

As a final parting word for investors considering gold or mining company investments, Bob said, “I think gold continues to have a rightful place as part of an investment strategy…[but] one has to be patient…and take a very long-term view”
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This was a powerful interview with one of the world’s top builders of wealth in the mining space, and is required listening for students and investors of the precious metals markets.

To listen to the interview, click the following link and/or save to to your desktop:

1. ["Altered System, Alteration" - Any area of rock which has been physically or chemically changed, "altered" if you will, following its initial creation.]↩

2. ["Magma Chamber" - A large underground pool of liquid rock (called "magma"), which when given enough time, will build in pressure, shatter/fracture surrounding rock, and move up towards the surface. Illustration.]↩